For HP, Even Good News Has A Dark Side

Having slogged through so much bad news of late, last week Hewlett-Packard marketers were quick to run to their laptops to make hay out of a closely watched market report showing that HP remained the word’s top-selling PC maker. But in their rush to shine a positive light on their struggling employer, the PR folks left out the most important point: HP is fighting to stay king of an eroding hill.

For HP, Flat Is The New Up

International Data Corp. (IDC) found that HP’s fourth quarter PC shipments last year remained roughly flat from the year before. But that was enough to keep it at the top with almost 17% of the market. Soon after the scrap of good news hit the Web, HP public relations went to work. “We believe HP’s position as the market share leader demonstrates out ongoing commitment to deliver superior PC products and experiences across customer segments,” the press release said.

Woo-hoo!

Ironically, in tooting its own horn, HP highlighted its biggest problem, which is its need to cling to dwindling markets. The IDC report found that global PC shipments fell more than 6% in the quarter and more than 3% for the year. It was the first time in more than five years the PC industry had recorded a year-on-year drop during the holiday season, according to IDC.

The reasons behind the decline are well known. People increasingly favor smartphones and tablets, both fast-growing markets where HP remains a non-player. Heck, even Microsoft, which helped to usher in the PC era, sees its demise and is pushing tablets and smartphones as the future of computing.

But for HP, staying flat in PCs was so exciting it had to churn out a press release. That’s not a good sign. But given what else is going on at the company, the temptation is understandable.

Due to management bungling over the last few years, HP has fallen ever farther behind its rivals in taking advantage of game-changing trends in the consumer and enterprise markets. The company paid a total of $24 billion for Autonomy and EDS to become a player in big data software and IT services, respectively, only to see both deals go down in flames through huge write offs.

HP Battles Workers

Meanwhile, HP is chasing distractions when its focus should be on innovation. In Texas, HP is in a tussle with customer General Motors, which is in the process of giving HP services the boot. Eighteen employees quit HP at the same time and without notice to join GM’s efforts to take its IT work in-house.

HP is asking the state court for permission to depose two of the workers; a move GM has called “retaliatory” and a “fishing expedition,” according to Bloomberg. It seems HP can’t understand why anyone would want to flee a company that has promised Wall Street that it will fire 29,000 employees this year and next.

Bright Spots

HP’s current state is not all dark. Last week the company launched a services center for in-memory computing, an emerging technology that significantly boosts application performance by keeping all data in system memory rather than on disks. The announcement came the same day SAP said it was making all its business applications available on its in-memory database called HANA. HP plans to throw its support behind HANA and is also working on its own in-memory platform, codenamed Project Kraken,” according to InfoWorld.

Kraken-like initiatives are what HP’s PR team should be crowing about, rather than the company’s managing not to shrink in the cratering PC market. Chasing hot new markets – not scrambling to be the last PC vendor to avoid extinction – is the only way to change HP’s image as a dinosaur.